Valid Reasons for a Members Voluntary Liquidation

members-voluntary-liquidationA Members Voluntary Liquidation or MVL is normal and happens to many businesses and industries. As its name suggests, the procedure is characterized by a deliberate decision to legally and formally close a solvent and viable entity; that is, the company has the full capacity to fulfill all obligations in full for at least within a twelve month period.

Of course, an MVL must be brought about for valid grounds and has to be done under applicable circumstances otherwise the court won’t allow for its use. With that said, below is a list of valid reasons behind a Members Voluntary Liquidation.

  • The desire of owners for a retirement…

Because the business and its owners are considered to be different juridical entities, corporate assets cannot be transferred to personal accounts unless liquidation is first achieved. This is why owners must first go through an MVL if they wish to retire, expire the company and enjoy the fruits of their long years of labor.

  • Pulling assets for reinvestment purposes…

For the same reason as stated above, should the owners wish to reinvest their resources in a different venture then a Members Voluntary Liquidation will have to be carried out. This is under the guise that all of the current entity’s resources shall be used for such investment.

  • The absence of a suitable heir or successor…

It also becomes a viable option to voluntarily close the business should there be no willing and qualified heir or successor to take over it. This is a particularly common scenario for businesses that are family owned and run. Instead of having the company be managed by the wrong hands, owners may opt to liquidate instead and maybe even put the money elsewhere.

  • Losing a vital member to the organization…

There are cases where a particular member’s importance to the organization is so great that their loss, death, retirement or resignation can lead to its downfall. During such circumstances and as a means to be risk averse, the procedure may be called for.

  • The completion of purpose…

There are cases where upon the completion of the corporate objective and/or the expiration of purpose, the company shall have to cease to exist. After all, what’s an organization for if it no longer has a goal? Since the entity is still solvent at this time, a Members Voluntary Liquidation is one very viable option.

Visit http://www.aabrs.com for more information.

Here’s What to Do When Faced with Winding Up Petitions

winding up petitionWinding up petitions are the creditors’ way of forcing the company to liquidate and pay for the amounts owed to them. This happens after they make applications to the High Court who after seeing valid reasons regarding the claim releases an order that permits such forced and compulsory liquidation. In most cases, the creditors will only resort to it after all other means of collection has been ignored or un-provided for by the debtor company.

Winding up petitions are no doubt an entrepreneur’s nightmare. It’s something that poses huge risks and hefty consequences. It is a grave statement of intent from your creditors that signal their exhaustion of all means to debt recovery. In such a situation they believe that the only way available for them to recover what has been owed is by liquidating your business.

What does one do when faced with it then? Read on and find out.

Act as fast as you can. The High Court shall issue the winding up order in only a matter of seven days and after that you can no longer contest its validity or opt out of it. This makes it a must for you to act quickly within the span of those seven days if you want to do away with the forced liquidation. During such span, you can pay the debt in full where possible or if not you can negotiate an arrangement with the creditor (e.g. extend deadline or revise credit rates and terms) or even dispute their claims.

Where you can prove that the business is viable, you may be granted two other options: an administration or a company voluntary arrangement. The two must also be done within the seven days which are apt to be called your “breathing” period.

Administration is where the business is granted to restructure itself. It shall be sold in part or in full and placed under new management. Doing so protects the business against a winding up petition, strengthens going concern and allows time for the entity to recover and eventually provide for payment to its creditors.

A company voluntary arrangement on the other hand allows for an agreement between the debtor company and its creditors where the latter agrees to be repaid some or all of the amounts due them over a specific period of time.

Winding up petitions are no doubt a lethal step on the part of creditors and to battle it out, entrepreneurs must make sure to act fast! Visit http://www.aabrs.com.

How a Pre Pack Administration Can Help a Troubled Company

pre-packed-adminstrationA pre pack administration is rising in popularity as one of the most effective business recovery options there are. It is considered as a huge savior by many troubled companies and to find out the reason behind that, you better read on.

The Business Recovery Professionals in the UK defines pre packs as arrangements under which the trade of the entire or a fraction of a business or its assets is negotiated with a purchase preceding the appointment of an administrator who in turn will effect the sale straight away or shortly after his or her appointment.

A pre pack administration is a restructuring method that allows troubled businesses, entities that are likely to be under insolvency and those at a high risk of dissolution and/or bankruptcy to sell part of or the entire company to a buyer, oftentimes to one of its directors, to a trade buyer or to a third party, where it will then operate under new management and under a new name. In some arrangements, a buy back will be included in the contract.

Its use has been popular for troubled companies due to a number of factors. Listed below are a few of the many.

  • It promotes business continuity as it strengthens the entity’s going concern. Entities at high risk of insolvency and bankruptcy often turn to immediate liquidations. There’s nothing wrong with that except if you don’t want to give up your hard work just yet. A pre pack allows operations to continue and the company to recover.
  • It helps save employment. The restructuring may call for a few layoffs particularly that of redundant positions. This is still good considering that in liquidations, everyone loses their income sources.
  • It retains brand image. Continuation of business says a lot for a troubled company. It means that you are still fighting through, finding means to recover and doing your best to make ends meet. Once your company has been dubbed as bankrupt, there is no more going back.
  • It invigorates trust and confidence among each member of the organization. Employers saving jobs, directors finding solutions to problems and employees participating in every way they could boosts morale within the organization. Manpower has a lot to do with the success of every company.
  • It also helps preserve creditor relationship and standing. A pre pack administration provides a bigger return to creditors than that achieved by liquidations. Truth be told, creditors will prefer the company to continue and pick up so that it can pay them in full than close down and pay them partially with the balance written off.


If you are having problems with your company, it’s best to consult with insolvency practitioners like AABRS.com.